Elec­tric­ity firms push for 100% tar­iff hike

Daily Trust - - FRONT PAGE - By Nu­rud­deen M. Ab­dal­lah, Si­mon Echewo­fun Sun­day (Abuja) & Mo­hammed Shosanya (La­gos)

Power firms are push­ing for a fresh 100 per­cent in­crease in elec­tric­ity tar­iff, the sec­ond in six months, Daily Trust in­ves­ti­ga­tions have shown.

The elec­tric­ity dis­tri­bu­tion com­pa­nies (dis­cos) raised tar­iff by over 45 per­cent in Fe­bru­ary.

The dis­cos had writ­ten to the reg­u­la­tory au­thor­ity, the Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion (NERC) de­mand­ing hike in tar­iff from the cur­rent av­er­age of N24 per kilo­watt (for res­i­den­tial consumers) to N50 per kilo­watt.

How­ever, the Direc­tor Gen­eral of the Man­u­fac­tur­ers As­so­ci­a­tion of Nige­ria (MAN), Mr Remi Ogun­mefun, told Daily Trust in La­gos that his as­so­ci­a­tion had op­posed that move in writ­ing to the NERC.

The NERC an­nounced the 45 per­cent hike in elec­tric­ity tar­iff with ef­fect from Fe­bru­ary 1, 2016, and said the

in­crease would en­hance ser­vice de­liv­ery and cus­tomer sat­is­fac­tion.

But since the in­cre­ment, the elec­tric­ity sup­ply across the coun­try has dropped af­fect­ing both house­hold and com­mer­cial ac­tiv­i­ties.

A source at the NERC con­firmed to Daily Trust that the dis­cos had writ­ten a let­ter seek­ing for the in­crease.

“When MAN got wind of the power firms’ let­ter seek­ing for the 100 per­cent hike, they equally wrote a let­ter coun­ter­ing the dis­cos claims,” the source said.

The spokesper­son of NERC, Mike Faloseyi, when con­tacted on Sun­day, said he was not aware of the pro­posed hike but promised to get back to our re­porter. When Daily Trust con­tacted him yes­ter­day, he said he was in a meet­ing but would con­sult with the com­mis­sion chair­man and get back to us. But he never did.

Power firms jus­tify tar­iff

Daily Trust ob­served that in an at­tempt to jus­tify its pro­posed elec­tric­ity hike, the um­brella body for dis­cos, the As­so­ci­a­tion of Nige­rian Elec­tric­ity Dis­trib­u­tors (ANED) has been run­ning ad­ver­tise­ments in about 10 na­tional dailies in the last five weeks high­light­ing “ba­sic elec­tric­ity facts the pub­lic must know.”

The pub­lic­ity mes­sages, ANED said, were meant to clar­ify the po­si­tion of 11 power dis­tri­bu­tion com­pa­nies in the power sec­tor value chain.

Some of the paid pub­li­ca­tions car­ried mes­sages such as: “Elec­tric­ity is a com­mod­ity with a price that must be paid.”

“The av­er­age res­i­den­tial tar­iff of N24.12/kWh is still sig­nif­i­cantly cheaper than self-gen­er­ated power at a cost es­ti­mated to be in ex­cess of N50/kWh,” among oth­ers.

ANED on its web­site also said the dis­cos had a five-year per­for­mance com­mit­ment to re­duce power in­ter­rup­tion, ex­tend the dis­tri­bu­tion net­work, in­crease me­ter­ing and im­prove the qual­ity of cus­tomer ser­vice.

One other mes­sage by the as­so­ci­a­tion reads: “disco op­er­a­tors only col­lect 24 per­cent of the tar­iff rev­enues. The bal­ance goes up­stream to trans­mis­sion, gen­er­a­tion and other in­dus­try stake­hold­ers (CBN, NERC, NBET, etc).”

The as­so­ci­a­tion said with­out a tar­iff that al­lowed the op­er­a­tors to re­cover their cost of op­er­a­tion, there would be no in­creased gen­er­a­tion or im­proved ser­vice de­liv­ery.

On the re­cent van­dal­ism, ANED in its most re­cent se­ries of paid pub­lic­ity said elec­tric­ity cus­tomers should blame van­dals and not the dis­cos as “we can­not give what we do not have.”

MAN re­jects fresh tar­iff

Man­u­fac­tur­ers As­so­ci­a­tion of Nige­ria (MAN) con­firmed to Daily Trust that it re­cently wrote the NERC to ex­press dis­plea­sure over moves to in­crease elec­tric­ity tar­iff in the coun­try.

Mr. Ogun­mefun said the let­ter to NERC was a con­tin­u­a­tion of MAN’s op­po­si­tion to in­tense lob­by­ing by elec­tric­ity dis­tri­bu­tion com­pa­nies to in­crease elec­tric­ity tar­iff with­out re­course to pro­ce­dures and rules.

He won­dered why the dis­cos were so anx­ious to in­tro­duce a new tar­iff regime when the on­go­ing tar­iff would only lapse in 2017.

“We have an agree­ment with the elec­tric­ity dis­tri­bu­tion com­pa­nies on MYTO 2 which states that the cur­rent elec­tric­ity tar­iff would ter­mi­nate in 2017.

“We have con­sis­tently chal­lenged the moves by the dis­tri­bu­tion com­pa­nies to hike tar­iff for man­u­fac­tur­ers out­side the MYTO 2,” he said.

Ogun­mefun said, “We filed a suit at the Fed­eral High Court La­gos which has since given in­junc­tion stop­ping the elec­tric­ity dis­tri­bu­tion com­pa­nies from go­ing ahead to tam­per with the cur­rent elec­tric­ity tar­iff.

“We will not re­lent in our op­po­si­tion to the moves by power com­pa­nies to in­crease elec­tric­ity tar­iff out­side the MYTO 2.”

He said the man­u­fac­tur­ing sec­tor alone con­trib­uted over 80 per­cent of the rev­enue of the power dis­tri­bu­tion com­pa­nies as such there was no jus­ti­fi­ca­tion to stul­tify the sec­tor with ar­bi­trary tar­iff regime.

He said Nige­ria was bat­tling with in­fra­struc­ture gaps and frus­trat­ing man­u­fac­tur­ers with high elec­tric­ity tar­iff would go a long way in killing ease of do­ing busi­ness in the coun­try.

“To imag­ine an in­crease in elec­tric­ity tar­iff with the al­ready frus­trat­ing state of in­fra­struc­ture in the coun­try is a mor­tal blow on the man­u­fac­tur­ing sec­tor,” he said.

Civil so­ci­ety kicks

The Nige­rian Elec­tric­ity Consumers Ad­vo­cacy Net­work (NECAN), a con­sumer group ear­lier ini­ti­ated by NERC, has frowned on the planned in­crease while ac­cus­ing the com­mis­sion of com­plic­ity.

NECAN Pres­i­dent, Tomi Ak­ing bo­gun, told our re­porter yes­ter­day they con­firmed the pro­posed in­cre­ment with MAN and that they would take up the is­sue with the min­is­ter of power.

“We to­tally con­demn it be­cause it is dan­ger­ous for our econ­omy at a point when the dis­cos are not sup­ply­ing any elec­tric­ity,” he said.

He said any fresh in­crease “is quite dan­ger­ous for this econ­omy be­cause it is like in­cit­ing the peo­ple against the gov­ern­ment; it means the peo­ple are be­ing pushed to the wall.

“The econ­omy is al­most near­ing a re­ces­sion. The in­cre­ment if done will be 200 per­cent in two years. We be­lieve the min­is­ter will not ap­prove such and for those who are hav­ing such thoughts in­clud­ing the own­ers of the dis­cos, are they re­ally in Nige­ria?”

Ak­ing bo­gun said “Even Ghana just com­plained of poor power sup­ply be­cause of the van­dal­ism here in Nige­ria. We are not hav­ing enough power now. This is the fourth time they will be ask­ing for tar­iff rise. When they first asked for 100 per­cent, NERC gave them 50 per­cent and it hap­pened the sec­ond time.

“NERC should have thrown their re­quest out but it is bet­ter we don’t wait for NERC be­cause they may not say any­thing to the ad­van­tage of the pub­lic. In the past, they aligned with the gen­cos, that is why we, as the voice of the pub­lic, said this must not be done,” he said.

Consumers’ re­ac­tion

In­di­vid­ual elec­tric­ity consumers across Abuja and en­vi­rons also ex­pressed their dis­may over the new pro­posal. Mr Nwigwe Obi who runs a weld­ing ven­ture in Nyanya, Abuja said it would not work as Nige­ri­ans would re­sist such moves at all cost.

“We have not even got­ten over that of Fe­bru­ary 1, 2016 when it rose to over 45%. This time, gov­ern­ment should know that ev­ery­body will rise up in protest be­cause it is too much,” he said.

Malam Haliru Musa, a cold room op­er­a­tor in Mararaba, Nasarawa state said the dis­cos should not think that way be­cause the power sup­ply sit­u­a­tion has been bad in the past months.

“The dis­cos won’t think of that be­cause van­dal­ism has crip­pled power and they have not sup­plied me­ters to cus­tomers. No­body will pay if they at­tempt to even in­crease a lit­tle,” he said.

Mr Odoh Vin­cent, a res­i­dent of Lugbe, Abuja said “with the last in­crease, my es­ti­mated bill rose from an av­er­age N3,000 monthly to about N7,000. The dis­cos promised to pro­vide me­ters after the Fe­bru­ary in­crease but we have not seen any yet.”

dis­cos re­sponse

When con­tacted yes­ter­day, the spokesper­son of ANED, Bar­ris­ter Sun­day Odun­tan said in a text mes­sage that it was not true. “No. That is not true. Call me later,” Odun­tan said. He didn’t an­swer sub­se­quent calls or re­spond to text mes­sages sent to his mo­bile phone.

From left: Group Man­ag­ing Direc­tor of NNPC Dr. Maikanti Ka­calla Baru, Min­is­ter of State for Pe­tro­leum Re­sources Dr. Ibe Kachikwu, Min­is­ter of Labour and Em­ploy­ment Sen. Chris Ngige and Se­nior Spe­cial As­sis­tant to the Pres­i­dent on Na­tional Assem­bly Mat­ters (Se­nate) Ita Enang dur­ing a con­cil­ia­tory meet­ing be­tween the Fed­eral Gov­ern­ment and PENGASSAN in Abuja yes­ter­day. The meet­ing con­tin­ues to­day. See story on page 7>>>

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